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      Scope has completed a monitoring review for MFB Hungarian Development Bank
      FRIDAY, 08/03/2024 - Scope Ratings GmbH
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      Scope has completed a monitoring review for MFB Hungarian Development Bank

      The periodic review has resulted in no rating action.

      Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

      Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

      Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

      Scope completed the monitoring review for MFB Hungarian Development Bank Private Limited Company (long-term local- and foreign-currency issuer and senior unsecured debt ratings: BBB/Stable; short-term local- and foreign-currency issuer ratings: S-2/Stable) on 6 March 2024.

      This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

      Key rating factors

      For the updated rating report accompanying this review, click here.

      MFB Hungarian Development Bank’s (MFB’s) BBB rating reflects the guarantee framework for its liabilities provided by Hungary (BBB/Stable), which is the key factor for aligning MFB’s ratings with the ratings of the sovereign. The explicit, direct, and irrevocable guarantees cover the bonds issued, credit and loans taken, deposits from the interbank market, and replacement costs of currency or interest rate swaps entered into by MFB for fundraising purposes. The funding guarantee amount is capped by Hungary's central budget, and the bank is prohibited from exceeding this limit in its debt-raising activities.

      Scope acknowledges that the bank holds significant strategic importance as a pivotal government-related entity (GRE) for the Hungarian state, entrusted with the implementation of crucial economic and social policies. In its commitment to bolster MFB's lending capacity, Hungary has strengthened the bank's capital position on numerous occasions.

      Challenges include: i) a modest but stable profitability; and ii) limited loan portfolio diversification. These factors are indicative of the development bank's public policy mandate.

      The Stable Outlook reflects Scope’s assessment that the risks to the ratings over the next 12 to 18 months balanced.

      The ratings/Outlooks could be upgraded in the event of an upgrade of Hungary.

      The ratings/Outlooks could be downgraded in the event of: i) a downgrade of Hungary; and/or ii) changes in the legal framework or guarantee structure that notably weaken government support for MFB.

      The methodology applicable for the reviewed ratings and/or rating Outlooks (Government Related Entities Rating Methodology, 13 July 2023) is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
      This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
      Lead analyst Jakob Suwalski, Senior Director.

      © 2024 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.

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